As Metallica gets another round of recognition for imacculate management and the bravery to suck, battles the band initiated a decade ago against pirated music continue raging in and around legislation. President Obama and the Internet helped deny SOPA's imminent congressional passage, but signing the ACTA treaty and hinting at its force in his State of the Union address initiate another round of copyright battles. While the indies scramble for an ethical solution and the majors still can't just look the marketplace in the eye, what needs to be realized is this: file sharing drives more commerce in a digital marketplace than would be possible in its absence. This is true of not just music, but also e-books and any other media. Hollywood can only blame themselves for the loss of revenue on such an overpriced, impossibly distributed product--that mechanism deserves all the failure it's brought upon itself.
When Barnes and Noble released numbers in late 2010 stating its online division then accounted for 17 percent of its market share, physical sales still generated ten times more revenue for the company; it was distribution tripping the retailer up in an expanding digital marketplace. When the nation's largest in-real-life bookseller shuttered numerous doors because of skyrocketing rent and its inability to pay it, The New York Times reported the book giant shutdown its 66th Street store because it was impossible for the company to pay rent at this Lincoln Center location it had operated for the last fifteen years. Parallel: In December 2006, Tower Records closed its last New York store, one block north of Lincoln Center, after filing for bankruptcy that August. The Tower website was sold separately from the company's physical assets and still retails music online.
Lincoln Center wasn't the only thing tying these together: Here we have two brick-and-mortar retailers losing revenue because of no foresight for shifting consumer habits. Though book publishers, retailers, and authors have a skeletal reference in the missteps of the evolving recording industry, there's one area they should ignore the lessons of the past: piracy. For the good of a free-flowing intellectual market, if the literary industry doesn't handle expanding piracy with any more delicacy, much more severe consequences for the existence of the market await.
The recording industry collapsed under the weight of digital downloads when Napster set the rubric for easy online file sharing--just illegally, but for all its followers. At the same time, the Recording Industry Association of America reacted too slowly to consumer demands, taking legal action against digital pirates rather than examining their lessons to help distribute goods (Napster is now a Best Buy company). In the wake of piracy crackdowns, the largest record labels focused on immediate revenue streams rather than conforming to demands for digital distribution. It was a repeat of the industry's failure to transition between records and CDs in the 1980s, but now the consumer stayed home. Then, the entire market fell apart when manufactures had nothing to offer. The industry didn't want to adapt to new markets because they had too much invested in the old ones--which may be the case now for any marketplace.
I know when I was a kid in Boise, Idaho, I spent as much time as possible on my dad's dial-up, figuring out how to span an album across four or five floppy disks, in order to share music with my friends and move music into my own manageable medium. As the tubes become more common and we can pipe anything in to anywhere from anywhere, that might have been the last phase of physicality--except we always bought the stuff we liked best. We used Napster as a sampler of what we could expect in an actual album--and then we went out and bought it. We also used AudioGalaxy. And Kazaa. And Limewire. And Morpheus. And whatever.
I'm not denying piracy as bad or how it thrives online. Internet identity laws keep illegal information flowing. Password-protected websites, similar to those still circulating digital audio, are cropping up on offshore servers, cloaked in rules of trust and secrecy, coupled with lively anonymous debate about the media being shared. One such site was BTJunkie, a massive torrent server that reached what TorrentFreak estimated to be 12 million users a day, until it shut down voluntarily this week in the wake of tougher international crackdown on copyrights management.
Flashback: October 2007, Alan Ellis, a young computer programmer from London, was arrested as a part of an international criminal investigation involving one such music sharing website called Oink. Oink was a bit-torrent tracker that users accessed through invite only, a collection of more than 200,000 audio recordings in various formats, an archive worth £300,000, said the prosecuting attorney at Ellis' trial. Ellis' defense countered with evidence the International Federation of Phonographic Industry used the site to distribute and promote its music. A witness also testified that users of illegal file sharing sites such as Oink bought more music than those who didn't.
In January 2010, a jury unanimously acquitted Ellis. He became the first to be tried for music piracy and set free.
Distributors of intellectual property stand to lose a substantial customer base, if they attempt to control piracy any further, or in the same way the recording industry did at the impetus of the perennially relevant and terrible Metallica inquisition. The number-one proponents of financial gain on music continue to thrust their Frankenstein of speed-metal into the conversation, peppering every discussion of the issue with their terrible wit and lack of taste.
Everyone involved with the control of this situation needs to realize that as large as the illegal sector is, the word-of-mouth and mob mentality it drives, before products even officially hit the marketplace, creates more physical sales then in a marketplace without it. Sites like Megaupload and BTJunkie and Rapidshare are not just providing a forum for pre-market distribution; these sites are hype machines and forums for the contemplation of consumer decision, much like a record shop or bookstore before it. We're not allowed to go there anymore though. They're all closing down.
There has been little reorganization of infrastructure since the obvious slide into digital sales began with the release of Amazon's Kindle or the Apple iPod. Record labels are still scrambling ten years after Napster to figure out a solution to the scheme. Some media analysts are predicting only three or four ebook retailers will survive this initial influx of retail activity. Others debate the very existence of record sales as we know them. If the digital industry back-end doesn't act with more care towards the people who are most enthusiastic about buying its product--a.k.a. the pirates--shrinking sales and a lethargic costumer base--one that will have to wait for the industry to catch up to its habits--lies ahead. Creative control will go elsewhere.
They are trying to make the Internet into a shopping mall: a place of sterility and controlled death. They want you to believe the Internet must be licensed and controlled in the same way the airwaves are. But the free flow of information, including illegal consumer practices such as digital file sharing, prove the web is the most democratic of communication forms. It's just so odd that the imposition of our democratic government actually limits the way a free music market needs to work of the moment; rather, such scruples initiate the possibility of monopoly, facilitating a regulatory trust where things like iTunes and Spotify not only must be paid for to use, but also track with their algorithms what your listening habits might be. I believe we can keep this system ours, as long as we remind the establishment it's not up to them whether or not we belong.